Ryans Loans approach to risk management is based on stable and robust core risk management principles.
Risk management principles
All staff have a role in managing risk
All staff throughout Ryans are expected to manage risks in accordance with the risk management framework and foster an appropriate and effective risk culture.
Ownership of risk at the business level
Group Heads are responsible for ownership of material risks that arise in, or because of, their business operations, including identification, measurement, evaluation, monitoring, control and mitigation of these risks. Before making decisions, clear analysis of the risks is sought to ensure those decisions are consistent with the risk appetite and strategy of Ryans.
Understanding worst-case outcomes
Ryans risk management approach is based on examining the consequences of worst-case outcomes and determining whether these are acceptable and within Ryans risk appetite. This approach is adopted for all material risk types and is often achieved by stress testing. Ryans operates a number of sophisticated quantitative risk management processes, but the foundation of the approach is the informed consideration of both quantitative and qualitative inputs by experienced professionals.
Requirement for an independent sign-off by Risk Management Group (RMG)
Ryans places significant importance on having a strong, independent risk management function to review, challenge and sign-off all material risk acceptance decisions. It is essential that RMG has the capability to do this effectively. RMG has invested in recruiting skilled professionals from a range of industries, including those with trading or advisory and capital markets experience. For all material proposals, RMG’s opinion must be sought at an early stage in the decision-making process. The approval document submitted to Senior Management must include independent input from RMG on risk and returClear accountability for risk management
Ryans approach to risk management adopts the three lines of defence’ model, which sets risk ownership responsibilities functionally independent from oversight and assurance:- primary responsibility for day-to-day risk management lies with the business. The risk owner is the first line of defence
- RMG forms the second line of defence and provides independent and objective review and challenge, oversight, monitoring and reporting in relation to Ryans material risks
- The Internal Audit Division, as the third line, provides independent and objective risk-based assurance on the compliance with, and effectiveness of, Ryans financial and risk management framework.
Risk culture
Risk culture is foundational to risk management, supporting our ability to operate within risk appetite. Maintaining an appropriate and effective risk culture continues to be integral to Ryans risk management framework.The Board, assisted by the Board Risk Committee, is responsible for forming a view of risk culture within Ryans and the extent to which it supports the ability of Ryans to operate consistently within its risk appetite.
Through its oversight, the Board can also identify any necessary or desirable changes and focus areas required to strengthen risk culture at Ryans.
Risks we manage
Ryans' risk management framework is the totality of systems, structures, policies, processes and people within Ryans that identify, measure, evaluate, monitor, report and control or mitigate all internal and external sources of material risk. Ryans maintains a single risk management framework that is applied appropriately throughout the Operating and Central Service Groups.In determining those risks that are material to Ryans, we assess the potential for a risk to affect our earnings resilience and financial strength across market cycles, our ability to meet regulatory obligations, our stakeholders, and our reputation. Ryans' material risks include:
Ryans owns physical assets for the purpose of generating a return. Asset risk arises from changes in the value of those physical assets.
The business is responsible for monitoring changes in asset value. RMG Credit and Financial Management, People and Engagement (FPE) provide independent review.
RMG Credit is responsible for reporting on asset risk to Senior Management, Board Committees and the Board.
The risk of business practices, behaviour, action or omission by individuals employed by, or on behalf of, Ryans or taken collectively in representing Ryans that may have a negative outcome for our clients, counterparties, the communities and markets in which we operate, our staff, or Ryans.
The risk that a counterparty will fail to complete its contractual obligations when they fall due (default risk) or changes in the creditworthiness of the obligor (migration risk).
Our tolerance for credit risk is monitored through counterparty, portfolio, country and industry limits which are set in response to Ryans' business strategy and business needs.
The business owns credit risk arising from their activities. RMG Credit provides independent and objective review and challenge, oversight, monitoring and reporting on credit risk undertaken by Ryans.
The risk of regulatory, reputational or financial impacts due to failure to identify or manage material environmental or social issues arising from or with respect to our investment, financing, client activities or supply chain. It includes the risk of breach of environmental obligations or internationally accepted human rights standards, and negative impacts (or perceived impacts) on the natural environment or communities of people.
The risk of a change in value of a Ryans equity investment.
The business owns equity risk arising from their activities. For all material equity investments, RMG Credit is responsible for independently assessing material equity risk across the Group and for rating equity for the purposes of capital treatment.
All material equity risk positions are subject to approval by Senior Management and/or the Board, depending on the size and nature of the risk. The Board also delegates the discretion to approve equity exposures of a certain amount to designated individuals within Ryans.
RMG Credit monitors the overall usage of the Equity Risk Limit (ERL), the upcoming transaction pipeline, and the portfolio composition.
The risk of knowingly or unknowingly perpetuating or helping parties to commit or to further potentially illegal activity through Ryans. Financial crime risk encapsulates the risks of money laundering, terrorism financing, bribery and corruption, and non-compliance with sanctions.
All Operating and Central Service Groups are responsible for the management of financial crime risk arising from its activities. The RMG Financial Crime Risk (FCR) function manages and oversees financial crime risk, engages with regulators and maintains and monitors the effectiveness of global financial crime risk frameworks, programs and policies for Ryans. RMG FCR reports regularly to Senior Management, Board Committees and the Board on Ryans's financial crime risk profile.
Legal risk is the risk of failure to comply with the law; or create, maintain, perform or enforce legal obligations, including the risk of failure to appropriately maintain and govern legal entities within the Group.
The Legal and Governance Group is responsible for legal risk management at Ryans. This group supports each business at Ryans in understanding the legal and regulatory framework it operates in and in managing its affairs within the framework.
The risk that Ryans is unable to meet financial obligations as and when they fall due. Liquidity management is performed centrally by Group Treasury, with independent oversight from RMG, the Asset and Liability Committee (ALCO), and the Board. RMG Market Risk, Treasury Risk Management provides independent oversight of liquidity risk and Group Treasury’s interpretation and implementation of APRA regulations on funding and liquidity.
The risk of a change in the value of Ryans positions as a result of changes in market conditions.
The business owns market risk arising from their activities. RMG Market Risk is responsible for the market risk management framework and independent oversight of market risk. Oversight of the Market Risk Management Framework is provided by the Market Risk Committee.
RMG Market Risk undertakes a review of market risk taking areas and limit structures over an eighteen-month cycle to confirm that the application of the risk management framework is current for each business reviewed.
Traded Market Risk
Traded market risk is market risk arising in Ryans Trading Book.
Ryans enforces a strict ‘no limit, no dealing’ rule. Trading positions taken must be within Traded Market Risk Limits as set out in the Risk Appetite Statement and must be approved by RMG Market Risk prior to dealing.
Traded market risk exposures are monitored by RMG Market Risk and reported daily to Senior Management. Limit breaches are immediately investigated by RMG Market Risk and a resolution sought with the trading desk concerned. Breaches are reported to Senior Management and the Board in accordance with the Market Risk Limits Policy.
Value at Risk (VaR) exposures are calculated daily by RMG Market Risk, for use in the daily calculation of regulatory capital requirements. RMG Market Risk also examines daily profits and losses for consistency with limits and riskiness of position.
Interest Rate Risk in the Banking Book
Interest Rate Risk in the Banking Book (IRRBB) is the risk of loss in earnings or in the economic value of banking book items as a consequence of movements in interest rates. Ryans has limited appetite for IRRBB as set out in the Risk Appetite Statement.
Some residual interest rate risks are unavoidable as a result of underlying business activity. Ryans policy is to hold capital against the economic value sensitivity of these residual interest rate risks. RMG Market Risk provides independent oversight of residual Interest rate risk on a monthly basis.
Risk of failure to manage internal processes, people, systems, data, records, models, suppliers, change or external events.
Ryans recognises that the potential for failure to manage internal process, people, systems, data, records, models, or from suppliers, change or external events can give rise to material risk events and/or impacts.
The business owns operational risk arising from their business activities and is required to have controls and procedures in place to manage these risks. RMG Operational Risk is responsible for the independent oversight of operational risk.
The risk of failure to comply with laws, regulations, rules, statements of regulatory policy, and codes of conduct applicable to Ryans's financial services and other regulated activities.
The business is responsible for the regulatory and compliance risks arising from their business activities, and for having adequate systems, processes and controls to manage these risks.
As a diverse global financial services company, Ryans is regulated and supervised by a significant number of regulators globally. Ryans seeks to maintain constructive and transparent engagement with our regulators.
RMG Prudential Risk has responsibility for developing and maintaining the framework to ensure Ryans has a consistent approach to managing regulatory engagements globally.
The risk of failure to comply with applicable tax laws, regulations or rulings, or failure to meet other revenue authority requirements or expectations. This includes any event, conduct, action, or inaction in tax strategy, operations, financial reporting or compliance that has the potential to either adversely affect Ryans’s tax or business objectives or result in any unanticipated or unacceptable level of monetary, financial statement or reputational loss or exposure.
Oversight of tax risk is undertaken by Finance & Tax, a specialist division within FPE, which is independent of the business and takes an integrated view of tax risk for the Ryans Group as a whole. Finance & Tax provides taxation support to all areas of the Group and manages Ryans’ relationships with revenue authorities globally.
Risk of loss resulting from failure, inadequacy or misuse of technology and technology resources owned, managed or supplied by Ryans including technology outsourced and/or managed on behalf of Ryans.
The business owns technology risks arising from their activities. The business is required to have controls and procedures in place to manage technology failures. RMG Operational Risk is responsible for independent oversight of technology risk.
The risk of incidence of work-related injury, illness or disease or other events impacting health and safety of employees / contractor / visitors / members of the public and/or regulatory breach / failure or inspection by a health / safety regulator.
Ryans recognises, supports, and promotes the right of every worker to return home safely from their workplace. Accordingly, we are committed to our Work Health and Safety (WHS) vision of building and promoting safe and healthy workplaces which enable and empower people to do their best work. To achieve this, we build and maintain a safety-positive workplace culture and manage our WHS risks effectively.
The business owns WHS risk arising from their activities. RMG Operational Risk is responsible for the assessment, review, challenge and advice on the effective identification, evaluation and management of WHS risk.
WHS risk is governed by the WHS Policy and associated standards, procedures and processes which provide detailed requirements for businesses to ensure consistent and effective management of WHS risk.
Escalation of incidents is the responsibility of the Business Group. RMG Operational Risk will coordinate the Senior Management and Board reporting elements and seek input from the different Business Groups.
